I came across a posting on Techdirt yesterday entitled Can Someone Teach The New Malthusians About Infinite Goods? written by Mike Masnick. Having read through it, I concluded that it’s seriously misleading in several ways, so I’m joining in the debate.

What are infinite goods?

Technically, there is no such thing as infinite goods. It’s a poorly thought-out concept. When Masnick uses the term, he is engaging in hyperbole, which he is also doing when he discusses “the economics of goods when scarcity is removed“. (Scarcity can never be removed, only reduced to a very low level). What he seems to be trying to discuss is the economics of goods when supply is plentiful. There is actually nothing new, unusual or poorly understood about that. When supply is plentiful, unless there is market interference, the price falls to very low levels.

This is the situation that we have reached in some areas of the internet activity. The cost of accessing a web page, for example, is almost nothing – but, and this is important, it isn’t nothing and it never will be nothing. You can hide the cost, especially if the cost is very small, but you cannot make it disappear.

I’ve touched on this reality before in Ten Reasons Why Software Cannot Be Free and you can explore the argument in that post, in respect of software. Software is never free, but it can be really inexpensive in the right circumstances. The same is true of other goods that consist entirely of electronic recordings such as pdf documents, music and video. They too can be really inexpensive in the right circumstances, but they are never entirely free.

So the statement in Mr Masnick’s article that “infinite goods work to grow a market” says nothing more than that low prices grow demand by attracting more buyers. Well duh.

What he follows this with is a diatribe against Malthus as follows:

“..every time there’s some sort of larger financial crisis, people spring up and deny that economic growth can occur any more. It dates back to Malthus’ incorrect belief that people were growing exponentially while food supplies grew linearly — meaning we’d run out of food. The problem, of course, was that he failed to take into account economic growth. That economic growth came from new ideas and new technologies (infinite goods) that made the production of food much more efficient.”

And then insists that growth can persist indefinitely if we try to ensure that the phenomenon of infinite goods is encouraged. In other words “lets scrap the patent system and other similar legal mechanisms like copyright.”

There are no “infinite goods”, period.

Let me first point out that Malthus’ mathematics was not at fault. His assumption of linear growth in food supplies was simply incorrect. New agricultural ideas and technologies made food production grow exponentially and, for a long time, the supply/demand situation was fine at a global level. Actually something quite important also happened here, because the efficiency of agriculture (and markets and transport) became so good that fewer and fewer people were needed in the farming and food supply industry. It was an impressive economic achievement, but we did not get “infinite food” – and we never will.

Masnick follows his attack on Malthus with the single most stupid commercial idea I’ve ever encountered. Let me quote:

“If you could invent a solution to creating drinkable water (which the article frets about, but which Dean Kamen believes he’s done), you could patent it and make it expensive. Or you could give it away, and recognize how you’ve just created a booming market for goods in places previously decimated by drought and disease. Rather than selling the water cleaning device, I would think there’s a much bigger market in giving it away free to trouble spots and then helping to sell everything else that a healthy population would then want.”

In other words all that’s needed to turn sub-Saharan Africa into one giant shopping mall is water purifying machines and Dean Kamen is just all-out-selfish wanting personal financial reward for his impressive invention.

Can someone teach Mike Masnick that there is no such thing as infinite goods?

Infinite water purifying machines manufactured and distributed at no cost whatsoever?

Why not? Water purifying machines should be free. Oil should be free – and infinite. Automobiles should be free too. Mansions in Beverley Hills should be free. I guess such suggestions are a natural outcome of believing in your own hyperbole. Einstein once said, “Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.”

Einstein had a point. Masnick does not.